SINDH: ATTACKING UNEMPLOYMENT

ATTACKING UNEMPLOYMENT – RECOMMENDATIONS

The Governor’s Committee on economic Rivival of Sindh’s Sub-Committee on Employment Generation Chaired by Ali Nawaz Memon, has observed with a great disappointment that whereas there are enormous job opportunities in the Province of Sindh, the limited opportunity access has failed to provide adequate level of employment to local residents of Sindh. Ground Realities - Facts, Size and Complexity and experience of past policy actions has been detailed in the Annex given below. This section deals with immediate actions and other short and long term policy measures.
Actions for Immediate Implementation :
In view of the urgent need to address un-employment, the Sub-Committee has primarily focused on Short term measures which the Government is competent to initiate. Whereas Long term measures have been detailed in Annex. The Short term measures are listed below :

1). The current level of exemptions for Social Security and other payments for labour, at 9, discourages traders and industrialists from increasing labour rolls. Traders and Industrialist should be exempted from Social Security and other payments for employment of labour upto 25 instead of 9, at least for an initial period of three years. Amendment in various Labour Laws including Social Security Ordinance will be needed. This is expected to double industrial and trade employment in Sindh.

2). Even though, “provision of contract labour” does not exist in law, much of the industrial labour is provided in this manner. Contract labour provided by various contractors to different industries business organisations must include a provision that at least 50% local labour will be employed. Within a year the number should be increased to 80%. A penalty of Rs.1000 per month per employee may be imposed against employers who does not comply. Immediate instructions must be issued to the Industries to ensure the recruitment of 50% local labour.

3). Corps Commander and Director General Rangers to ensure recruitment of local citizen into Armed Forces/Rangers to initiate necessary measures to further encourage the local population into Armed Forces/Rangers. For this purpose relaxation may also be given in height etc. where-ever acceded.

4). In context of the recently approved funding for water courses lining throughout Sindh, arrangements must be made to ensure 100% recruitment of locals directly or through contractors as needed. Sindh Government should issue instructions to the Irrigation Department to ensure compliance through tendering and contract award process.

5). In context of recently agreed National Drainage Programme schemes, arrangement must be finalized to make 100% recruitment of locals by putting it as a tender condition. Irrigation Department should be issued instructions to lay down such tender conditions.

6). Hence-forth all the tenders documents of all the Department in Sindh and the Federal Government operating in Sindh should incorporate following clauses :-

i). All the 100% of unskilled labour be recruited from the Province of Sindh.

ii). According to the category of the tenders of Civil works/Mechanical/ Electrical/Electrronics/Computers technical staff (i.e. Engineers/Diploma Holders) 80% of the technical/skilled staff should be engaged by the contractors from the permanent resident of the Province with view that their stay in the Province is not less than 15 years.

iii). To the extent of 10% of the technical staff, the contractors shall be bound to employee apprentices/ in terns.

Sindh Government/Governor Sindh should issue the required instructions/ ordinance where ever required.

7). Information Technology facilities must be spread through out Sindh. Sindh Government should give special assistance and incentives only to those firms who will provide benefit to the whole of Sindh. In order to avail more incentives the organization must establish branches in several towns of Sindh. P & D Department, Education Department and Labour & Transport Departments may be issued such instructions to implement the policy after necessary empowerment.

8). It has been noted that the Government has already abolished a large number of posts in Sindh. This has resulted in suicides and excessive hardships. Government of Sindh must not abolish any further existing vacancies in its various Departments. In view of high unemployment the vacancies must be filled as quickly as possible on the basis of merit. Candidates already cleared by the Sindh Provincial Public Service Commission must receive priority. Finance Department/Governor may issue such instructions to all the Administrative Departments.

9). It has come to the attention of the sub-committee that there are several job vacancies at Karachi Airport for which Sindh Government must make arrangements to get these filled them with residents of Sindh. Matter may taken up with the Ministry of Defence/Civil Aviation Department, Government of Pakistan, to follow to Provincial quotas in CAA/ASF at Karachi Airport.

10). Karachi Public Transport Society is expected to announce a large number of vacancies for operation under Metro Buses in near future. They must be required to recruit from among permanent residents of the Province.

11). Policy regarding right-sizing of Government operations as stated by the Federal Minister for Finance, Mr. Shaukat Aziz namely that no Government employee will be fired must be strictly followed in Sindh. The surplus staff must be trained for other productive jobs. Directorate of Manpower and Training under Labour & Transport Department may be asked to arrange such courses of retraining of surplus staff in Staff Training Institute, for alternative job.

12). The training facilities are available with the Manpower, the Social Welfare Department and Education Department. Full use of the training facilities for skill upgrading must be made for which instructions may be issued to labour & Transport, Education and Social Welfare Departments.

13). The courses of the training should be determined in cooperation with the employers’ associations, Information Technology professional, national and international recruiting agencies, according to the job requirement at local, national and international levels. Directorate of Manpower and Training, Labour & Transport Department must get the required input along-with necessary funds.

14). A massive scholarship programme should be launched for training of needy students in the field of Information Technology so as to allow poor students an access to the Information Technology training. This can also be done through establishment of a revolving fund created by the Provincial Government to finance training of poor payable as loan (___________) i.e. which should be repayable when the concerned trainee starts earning. Such Revolving fund may be placed at the disposal of Directorate of Manpower and Training Department for arranging scholarship for poor trainees of I.T.

15). Export of manpower must be actively facilitated and pursued in all personnel categories. Over seas Employment Corporation may be provincialized and recruitment of overseas employment should be made with the assistance of Employment Exchanges in Sindh.

16). Special programme has been launched by SZABIST to turn graduates marketable. Short courses in interview skills, computer literacy, entrepreneur-ship must be actively persuaded in order to achieve results within one to two years.

17). The public funding being limited, the District Development Cooperatives under District Coordination Officer when in place as chairman, private participation should be organized. These co-operatives should take up housing, commercial and industrial projects in all towns and market centers on cooperative basis . This will generate employment through the development carried out by the cooperative. Instructions should be issued to Provincial Cooperative Department and District C.O. to implement the task.

18). Qualified individuals who lack the experience are proposed to be in through the Government Departments and paid stipend during the intern-ship period. Governor may issue such instructions to all the Administrative Departments and funds may be allocated for awarding stipends to interns.

19). The private Sector should be encouraged through incentives to employ apprentices/trainees interns. In this connection, the apprentice law should be strictly enforced, and the apprentices/trainees should be taken out of preview of labour laws. Labour & Transport Department (Directorate of Manpower & Training) should be issued instruction to implement the Apprenticeship Ordinance 1962 effective.

20). Information Technology training centers in private sector should be utilized to train computer teachers/tutors to up-grade a large number of Training of Trainers (ToTs) to launch a massive programme of computer literacy through Government Schools/Colleges starting with Secondary School. A major benefit could be gained by arranging funds for purchase of computers on deferred payment basis/or launching a Government guaranteed soft term loan for purchase of computers/establishing computer institutes in the rural areas including towns. Adequate funds may be provided to Education Department and Labour & Transport Department to launch massive programme in Colleges, Schools and Technical/ Vocational Training Centres in Sindh particularly in rural areas.

21). The Government purchase should be made district wise, particularly that of school furniture and science equipments, to encourage local manufacturing. This would have a direct impact on employment and skill development. Education Department etc. may be issued instructions.

22). The workshops attached with the training institutes should be given preference in the placing orders of purchase of goods which could be produced by them. Technical Training Centres and Polytechnic Colleges may be allowed to impart training on training- cum-production basis.

23). The industrial sector should be encouraged and helped to recruit people by sending their recruitment agents to all parts of the province including interior of Sindh. Funds may be placed at the disposal of Labour & Transport Department to take the teams of Industrialists for making recruitment from grass-root level i.e. Union Council Level for Apprenticeship Training. For such trainees stipends may also be paid by the Government in order to reduce the burden of employer.

24). A scheme of salesman training proposed by the Manpower directorate should be implemented as one of the development schemes in the current financial year. This envisages training of sales man through local shop keepers by providing stipends to the trainees. P & D Department may be asked to approve the scheme of Directorate of Manpower and Training submitted during 1994-95 with amendment according to present requirements.

25). The restrictions on residential buildings particularly flats/complex for establishing schools upto K.G./Nursery, may be waived. Thus encouraging associations of flat residents or complex to set up such facilities. This would create a large number of employment opportunities. Education Department may be issued instruction to lift such restrictions.

26). All the Banks including private commercial bank should be instructed to launch Mini Credit Fund schemes in addition to the Micro Credit Bank. The micro credit would guarantee employment all over Sindh. Matter may be taken up with Federal Government, Ministry of Finance to issue instructions to Banks.

LONG TERM DIRECTIONS :
· Further Strategy For Employment Generation and Manpower Development
· Primary emphasis on employment generation in rural areas and surrounding small towns through development of physical and social infrastructure and rural industries as the leading sector to deal underemployment and low incomes and drastically slow down rural-urban migration.

· Since informal sector absorb much of the incremental labor force. Major effort at accelerating development and increasing productivity of small scale/informal sector enterprises is required to generate employment in less developed regions.

· To encourage the effective participation of females in income generating economic activities.

· Special measures to reduce unemployment among the educated through real needs of the economy specially in the social sectors and private sector employment.

· Development of a well trained skilled labor force to help achieve significant gains in productivity and efficiency primarily through the efforts of the private sector.

· Trained labor force to control the cost of production and ensure labor discipline.

· Find overseas employment opportunities for the labor force.

· Increased opportunities for self-employment for those with education, skills and enterprises specially through better access to credit facilities.

· Strengthening the institutional machinery for effective monitoring and implementation of policies for human resource development. A special committee of the Cabinet consisting of key ministries and headed by the Chief Executive of the Province will oversee development in this critical field.

· Seven key industries which have significant direct and indirect employment generating potential are engineering, electronics, textiles, plastics and related chemicals, agricultural processing, fruit canning and printing and publishing. It is recommended that Government specifically look into measures for stimulating the growth of these industries.

· Measures are required to make the labor force disciplined and committed. Considerable emphasis must be given to worker’s education and management training to promote healthy trade unionism.

· Rural Employment Generation
· Following steps be taken to create job opportunities in the rural areas and surrounding small towns.

· Rural industrialization must be viewed as a leading sector for employment generation in the rural economy. The following measures can be taken for rapid development.

· Setting up of Industrial Support Centres to be located in specified growth points. Their functions would include marketing (including building linkages with large scale manufacturing), monitoring and quality control, skill training and product development, forging and heat treatment facilities and links with credit institutions.

· Project profiles to be prepared for all districts. Local councils be provided funds to hire consultants to prepare commercially viable projects. The private sector should then be encouraged to undertake them.

· Special cells to be set up in Small Scale Industries Corporations (SSICs) dealing solely with rural industries.

· A continued concerted effort for the development of physical and social infrastructure should include:

§ Basic infrastructure facilities to be provided at the point where farm-to-market roads join for setting up small shops, distribution depots, repair/service facilities and development of small sized commercial/industrial plots. The program can start with initial matching grants to become self-financing.

§ A toll based program for road construction linking rural areas to market towns with private sector participation.

§ Marketing centres (Markaz) be setup. A revolving fund should be created for expansion of existing `mandis’ and setting up new ones on a completely self-financing basis.


· Urban Employment Creation
· To increase urban employment focus should be on the promotion of small scale/informal sector, development of new residential and commercial areas in urban centres on a self-financing basis, increasing opportunities for self-employment and provision of basic infrastructure services in low income areas.

· Specific recommendations for the growth of the small scale sector include:

§ Effective representation in the decision making process. Business chambers for small scale industry should be set up in urban centres. A separate unit (in either Industry or Planning Division) should be set up which can act as a think-tank for coordinating action in this field.

§ State Bank undertake innovative pilot projects for loans to the small sector based on (a) organization of borrowers into groups (b) flexible repayment plans (c) training a cadre of workers who are in direct contact and have personal knowledge of potential borrowers.

§ Measures for increasing opportunities for self-employment should include increased allocation for and simplifying its procedures for disbursement of loans. Also the present maximum loan of Rs. 50.000 is not adequate and the amount needs to be periodically adjusted.


· Educated Unemployed
In the short and medium term, the following measures to reduce unemployment for pass-outs form the matriculation and intermediate levels are suggested:

· Intake in the existing one year diploma course for teachers training be increase to meet targets for primary education enrolment.

· Training in para-medical services be recommended, of which presently there is an acute shortage.

· To promote employment of educated labor in the private sector, increase training facilities for commercial, clerical and secretarial skills.

· The oversupply of doctors is a temporary phenomenon. They should be encourage to be work in rural areas and on providing facilities for specialization and postgraduate studies. Ideally, the two should be combined by making rural practice a pre-requisite for specialization.

· Rapidly growing modernizing economy be provide fresh engineers practical training necessary for infrastructure. An apprenticeship scheme providing fresh engineers with practical service would go a long way to solve this problem.


· Investment in Human Resource Development
· The private sector should take the lead in vocational/technical training with the government playing an active support role in developing a co-ordinated system of vocational training.

· Thrust of policies in vocational/technical training to break away from the present low technical competence trap should be as follows:
· .

· The present system of apprenticeship training need to be drastically revised. The system should combine on-the-job with classroom training.

· A special fund should be placed at the disposal of the PTB of provide matching grant for any vocational training institute set up by the Chamber of Commerce and Industry, trade association like APTMA or other non-government organizations. The government should concentrate on supervising the adherence of standards for training.

· The government would have to play an active part to produce skilled manpower for assimilation and spread of new modern technologies especially in the application of electronics, computers and modern production systems.

· Trade-tests (through the Provincial Training Board Skills Standard and Certification System) for those who are trained through the informal “Ustad-Shagird” system.

The establishment of a Policy Planning Board for Vocational and Commercial Education in Sindh Province. This Board should be headed by the Chairman Planning and Development Department with the majority of members from the private sector. This will help evolve a built-in-mechanism through which an optimal mix of vocational and general education can be made in each province.


· Higher Education, Science and Technology (S and T)

In order to improve research and higher education in science and technology the number of Ph.D. holders in these fields must be vastly increased. In the short-run this can only be done by sending candidates overseas but in the long run domestic capacity must be built-up. Existing institutions (e.g. PCSIR) should be given the status for awarding post-graduate degrees. All Ph.D. graduates should be guaranteed a job in BPS-18 by the government for two years for undertaking teaching and research at a university of their own choice in order to facilitate their entry into the labor market.

Universities be selected to conduct teaching at graduate and post-graduate level in emerging subjects and technologies like lasers and fibre optics, genetic engineering and bio-technology, material sciences and micro-electronics.

Qrze-Hasna Fund of the Banking Council should be substantially enlarged to provide loans to science students. The repayment of these loans should be re-cycled by a revolving fund.

· Mobilizing Women
· Improved access to education must be the prime focus of any strategy for mobilizing women in the economy and improving their welfare. At the primary level provision of a hot-midday meal free or at a subsidized cost would increase attendance rates.

· Measures to increase employment and income opportunities for women should include:

§ Training to enter new cash earning activities such as dairy, agriculture and social forestry. Agriculture extension services should focus more sharply on women workers. This would necessitate a significant increase in female extension agents and livestock supervisors.

§ Better access for rural women to formal credit. The ADBP `Couple Mobile Credit Scheme’ be revived and `group’ approach to loans to be adopted.

· Increase enrolment in vocational and technical education through introduction of double shifts and new institutes to produce trained women who can serve as teachers at industrial homes and skill training centers.

· In order to encourage export of manpower, regular campaigns and visits to main potential employers especially in the Arab countries should be persued.

IMPLEMENTATION ARRANGEMENTS :
1. Minister for Finance, Planning & Development who is also the Chairman of the Task Force must make suitable arrangements to ensure prompt implementation of the above recommendations.
2. Secretary of Labour (who also Secretary of the Sub-Committee) should be assigned the task of implementing the recommendation and follow up as required.
3. It is assumed that Sindh Cabinet will approve appropriate recommendations in context of the Revival Plan within next one month. Approved measures by the Provincial Cabinet must be implemented immediately.
4. Measures requiring Federal approval and/or funding must be followed up.
ANNEXURE

UNEMPLOYMENT PROBLEMS IN SINDH (DRAFT)

Ground Realities - Facts, Size and Complexity :

The most challenging issue facing Sindh today is the high rate of growth of population and labor force which is not matched by adequate investments and economic growth. An economy whose population and labor force are growing at over 3 percent per annum, a literacy rate of less than 40 percent, possesses and insignificant base for the production of high level scientific and middle level technical manpower, and whose quality of education has seriously deteriorated in recent years has to be streamline now before problem get bursted.

One of the key problem Sindh is confronted today is the issue of open unemployment which have attained new heights. Before addressing the different dimension of this issue, it is necessary to reveal some basic statistics on this issue before formulating a strategy to respond to this challenge.

The labour force survey publishes by Federal Bureau of Statistics provide information on the composition of civilian labour force and its distribution in employment and unemployment categories but relatively less reliance is being placed by the researchers particularly on figures displays unemployment rates which is considered highly under estimated. However following key findings are emerge from these statistics.
1. The net annual addition in the Sindh labour force is estimated at 450,000 persons (according to labour force survey of 1996-98 periods) implies that Sindh economy has to absorb this incremental labour force if it does not worsen the unemployment and under employment situation any further.
2. Nearly half of the incremental labour force is illiterate, 22 percent and 11 percent matriculates and intermediate, and about 14 percent having qualification graduation and above (see table 1).
3. The share of unemployed is roughly around 23 percent each between the age group of 15-19 and 20-24 years. (see Table-2)
4. The share of unemployed between literate and illiterte is roughly around half each. Among the literate the highest 22 percent are having qualification less than matric followed by matric 11 percent, intermediate 8 percent and graduate and above 6 percent. (see Table-3)
5. The incidence of unemployment is a u shaped curve i.e. highest among the new labour force entraints of 10-24 years age group (6-7 percent), reduces to nearly 2 percent between the age group of 25-49 years of the labour force and rises there after. (see Table-4)
6. The research undertaken at AERC on urban unemployment issue in 1986 also examine the nature of unemployment phenomenon i.e. weather it is voluntary in character (meaniing their reservation wage are higher than the market is offering given their age, qualification and experience) or in-voluntary in character (asking for lower wages than the market wage). The finding shows that the ratio of average reservation wage to average actual wage at the point of entry is exceed unity for most levels of education and then tends to fall in the later age group to below one. This reinforces the conclusion that some of the initial unemployment of youth is voluntary while for older workers most of the unemployment is involuntary. (Based on this criteria the extent of involuntary unemployment (most chronic) was estimated at 53 percent of the total unemployed. The highest incidence of involuntary unemployment occur among the relatively older worker 20-24 years (63%) and reaches a maximum to 92 percent for the oldest workers. With respect to education category the highest component of involuntary unemployment is observed in the case of intermediate at over 82 percent and lowest among workers having qualification primary (see Table-6).
7. Beside the problem of open unemployment in Sindh, the under employment among the employed manpower is also alarming and need to be attended in future.
8. The employment profile of Sindh shows (LFS 1997-98) that nearly 79 percent of the rural labour force earn their livelihoods through the agriculture sector. Among the 21 percent non agriculture employees 12 percent and percent work in the formal and informal sector respectively. Contrary to this in urban areas 96 percent are working in non agriculture sector and about 53 percent and 43 percent are working in informal sector and formal sector respectively. This indicates that informal sector generated a significant number of emloyment oppurtunities for the labour force (see table ).
9. In the urban informal sector nearly one third workers belongs to legislators/senior official/managerial occupation followed by 23 percent from crafts and related trade workers and 18 percent clerical and sales staff. In rural informal sector the highest 33 percent are unskilled workers followed by 25 percent belongs to legislators and senior official, and 13 percent each from clerical and shop workers and crafts and related trade workers. (see Table –8).
10. The above research beside highlighting the key unemployment problem further demonstrate that
· The problem of the educated unemployed is especially serious after matriculation and intermediate level. A substential number entering the labor market from the matriculation level or above every year join the ranks of the unemployed.

· The problem of unemployment among graduates may be relatively small in numbers quality and mismatch. However, it is devastating for families of thousands of unemployed graduate doctors, engineers, accountants, lawyers, etc.

· Women are Sindh’s most neglected human resource. Most indicators of women’s welfare such as life expectancy, primary school enrolment, birth related deaths and labor force participation place Sindh at the bottom or near bottom.

· Educational level and skill training of the industrial work force remains very low.

· The scientific manpower base in Sindh is extremely shallow. Only 20 percent of the relevant age groups pass matriculation and only a quarter of these students pursue further studies in science.

The significance of the problem of labor non-utilisation in Sindh has been shown that the problem of open unemployment is attaining heights which if unattended will soon lead to a formidable structural labor absorption problem. It has also been observed that an important proportion of those who manage to get themselves employed, end up doing jobs which are not in accordance to their productive capacity. The end result of these two phenomena is the wastage of the most important resource of the country - the human resource.
Projects implemented to alleviate unemployment and their performance :

Some schemes which were designed to reduce unemployment are listed :

1) Small Business Finance Scheme : This programme was created in 1972 in order to finance cottage and small scale private sector industries, individual transporters, small businessman, traders and professionals.

2) Youth Investment Promotion Society : It was created in 1987 to provide financial assistance to unemployed educated youth to enable them to set up their own small business.

3) Provincial Small Industries Corporation : This was created to provide loan to qualified professionals to help them to start their own business. It may be appreciated that nearly 6000 loans have been made in Punjab whereas only 45 loans have been made in Sindh and an estimated 50000 jobs have been created in Punjab whereas 229 have been created in Sindh.

4) Self Employment Programme : This programme was started in April 1992 and ended in June, 1994. It was created to provide loans to unemployed persons as individual or in groups for self employment.

5) Public Transport Revamping Scheme “Yellow Cab Scheme” : This effort was started in February, 1992 and ended in October, 1993. It provided loans for purchase of public transport vehicles to educated youth. Vehicles were exempted from import duty and sales tax.

6) First Women Bank Loan Scheme : This continuing scheme was started in 1991 to provide loans to lower in-come women interested in starting income generating activities.

7) Awami Tractor Scheme : This scheme has been introduced to provide loans for purchase of tractors to small land lords in order to facilitate them for increasing their agriculture income.

Reasons for lack of success:-

The project achieved only partial success for various reasons. For example, the system envisaged under the scheme was so complicated that the poor unemployed youth could not avail the opportunities, rather it provided the chances to the well-off persons and made the poor more poorer. From the assessment of the system and results, the following reasons may be visualized for failure of the schemes:-

1) Complexity of procedure for advancing loans to unemployed youth.

2) Condition of guarantee for advancing loans.

3) Non-existence of transparent system in the institutions responsible for granting loan.

4) Regional attitudes of the personnels of the institutions.

5) Non existence of provincial control/authority over the relevant institutions granting loan.

6) Non existence of monitoring system for scheme.


In view of the above position, it can well be imagined that complex procedure for granting loan was involved for the individuals in process of getting loan, as the individual has to move from pillar to post which ultimately takes a long period and incurring sufficient expenditure which is beyond the means of unemployed youth who is already passing his life in frustrated atmosphere. Besides individual intending to start small business in Sindh has not been encouraged by the personnel of D.F.Is in the Province by the regional attitudes and their personnel working in the authoritative capacity which can be assessed from the comparison of loans advanced in Punjab and Sindh Province. Yellow Cab Scheme was also made beneficial for the people relating to regional attitudes or having influential capacity. As such unemployed youth in Sindh could not be made beneficiary. Apart from the scheme, establishments of small industries have not been provided with incentive of tax exemption in Sindh and condition of training and aptitudes was not laid down in the system. In addition, the major marketing trends were not set out and coordination system was also in-existent.

From the analysis and research undertaken at AERC, some basic policy implication emerge from the analysis. These can broadly be categorised into two sets of proposals the macro and the micro measures. Macro measures primarily comprise the broad policy recommendations which make use of the basic macro-economic tools to tackle the problem of employment in Sindh. Micro measures, on the other hand, are more precise and relate to the employment problem more specifically. These can be summarised as follows:
· MACRO MEASURES:
· Moderate Wage Policy:
Reservation wages for the sample labor force appear to be generally low. For new entrants in the labor force (10-14years) it is, on an average, is Rs.930 per month, raises gradually to Rs.2313 for age groups 40-49 Years and falls thereafter (see table 4.9). Research has also demonstrated that the reservation wage even for the educated worker, is rather low (table 4.11). Therefore, the more appropriate policy for the economy at this stage is perhaps a low wage-high employment policy. Instead of raising minimum wages through minimum wage legislation, thereby reducing the demand for labor, emphasis should instead be on a policy which encourages the demand for labor by not increasing its cost. Relatively low wages should, however, be accompanied with basic fringe benefits and job security.
In addition, the government should follow the policy of price stabilization, especially with regard to wage goods like atta, sugar, vegetables, ghee, cotton cloth etc., in order to keep the cost of living low.
· Payroll Taxes:
The presence of high payroll taxes (SES contribution, educationcess, etc.) has discouraged employment and has led to the emergence of contract labor. It is suggested, therefore, that such taxes be de-linked from the wage bill and levied instead through a surcharge on corporate income tax. This measure, will not only reduce the incentive to hire contract labor but will perhaps also encourage more employment. Funds generated from these taxes should be utilised for labor housing and other priority needs specifically.
· Role of the Private Sector:
The role of the private sector should be expanded both in the provision of services and in industry in areas which have hitherto remained in the domain of the public sector. For employment generation the role of the private sector in the small-scale industrial and services sector, in particular, will have to be promoted. Relative to increase in output, these sectors have high employment elasticities of educated workers of 0.96 and 0.95 respectively. For this purpose, it is recommended that investment advisory services for small projects (say, upto Rs. one million) be established by professionals in the private sector. The required financial support can come through the various Employment Funds like Youth Investment Programme.(YIPS) etc.
· Private Investment Banking:
In line with our previous recommendations supporting the private sector to provide employment opportunities, it is suggested that private investment banking should also be encourage. It has been witnessed in the past that private investment companies raised substantial amount of funds at high rates of return. Through a private investment banking system, duly safeguarded against corrupt practices through appropriate legislation and promising reasonable rates of return, these funds can be channeled into small profitable enterprises. Such small enterprises can have a significant multiplier effect on generating employment. Also, this will serve to channel resources into formal, productive activities which otherwise find way into the informal market and unproductive investments e.g. land speculation etc.
· Growth Sectors for Karachi:
Educated employment in Karachi is the highest in Community and Personal services (Health, Education, etc.) (39 percent), Banking and Insurance (13 percent) and Wholesale and Retail Trade (18 percent) (see table 2.4). Karachi has a comparative advantage because of the availability of labor force and agglomeration economies in these sector. Government policy should, therefore, be directed towards stimulating growth in these sectors in Karachi and other urban areas. It is crucial that the location of such activities, e.g. banking, should not be shifted out of Karachi otherwise this will greatly exacerbate the problem of educated unemployment in the city.
· Revision of Industrial Location Policy:
Industry has traditionally been one of the major employment sector in the city. Currently it accounts for 20 percent of the total labor force and 15 percent of the educated labor force in Karachi. Therefore, keeping in view the employment potential of this sector the current ban on the establishment of manufacturing units needs to be reviewed. This will go a long way to mitigate the problem of the educated unemployment in the city.
· Labor Market Information System:
Greater involvement of trade unions as an information input into the labor market information system needs to be promoted. Trade unions (now that they have been rehabilitated again) should also be entrusted with the function of identifying training needs and priorities and the management of training programmes and training institutes.
· MICRO MEASURES:
· Promotion of Higher Education:
Peak rates of unemployment are observed among labor force with moderate level of education i.e. matriculates and intermediate (14 percent). The unemployment rates for graduate and postgraduate qualifications are relatively low, about 7 percent. It is, therefore, suggested that policy for reducing the share of workers in the labor force with moderate levels of education be adopted. This can be achieved either by diverting the labor force entrants to higher general/professional education with an emphasis on professional training educations or to vocational/technical education with an emphasis on relevant skills in demand in the market.
It appears, however, that the government policy does not provide the desired high level of incentive to high education. It is interesting to note from cohorts of primary school going age children that only 2 percent of the labor force entered into professional/university education. This low rate of enrolment at a university/professional education level and significant decline over time in enrolments is perhaps because of a lower allocation, of funds as part of the government policy at a university/college level education and its high emphasise on literacy and formal primary education. This phenomenon is further reflected that per student public expenditure to primary education which has increased by the ratio of 8.2 over the years, public expenditure on college education has only increased by a ratio of 2.4 and university/professional education by a ratio of 5.2. In real terms these expenditures appear to show a decline at a higher level of college and university education. It is, therefore, suggested that government should perhaps give a higher priority to college university/professional level education.
· Promotion of Vocational/Mid Career:
Technical training in relevant skills for youth with matric and intermediate qualification needs to be promoted. These will help workers with moderate level education to acquire specific skills and thereby increase the demand for their services. It is suggested that such training facilities should particularly be located in the high unemployment areas Sindh urban and rural areas.
Also, research on urban unemployment issues at AERC has demonstrated that the extent of job-mismatch appears to rise, more or less, steadily with age reaching the peak magnitude of 40 percent for older workers.. This points to the potential need for training not only of school-leavers but also of mid-career workers. The evidence of relatively greater underemployment among older, more educated workers indicates the possibility that human capital tends to become obsolete over the life-time of workers and there is need, therefore, for retraining to update skills. The incorporation of older, already employed workers into technical training programmes would, however, imply not only more specialised curricula but also necessitates different, timings (e.g. evening courses).
· Community-Based Employment Programmes:
Use of the Employment Fund for bulk lending to community based, neighbourhood level organisation is recommended. The success of community based projects like the Orangi Pilot Project (OPP) and the Baldia Pilot Project in Karachi in promoting income-generation activities highlight that NGO can be successfully used to generate productive employment at the grass root level.
An important merit of community mobilisation in such a manner is that it will not only lead to the development of employment opportunity and advisory services at the grass root level but there will also be a careful monitoring of the funds stages. Besides, it also act to counter community activation on negative lines and replace them through positive, productive activities.
· Small-Business Promotion Programme:
To prevent young engineers etc. placing demand on the already existing somewhat scarce employment opportunities, it is suggested that these young professionals be inducted into small business promotion training programmes where the emphasis is on importing management skills for running small enterprises. These programmes should be run by professional institutes like the Institute of Business Administration (IBA), Pakistan Institute of Management (PIM), Institute of Chartered Accountants (ICA), and Institute of Costs and Management Accountant (ICMA). Participants must prepare feasibility for small projects as a requirement. These feasibility should be examined by a board consisting of the training faculty and the representatives of Small Business Corporation, VIP etc. If approved funding for the projects be made automatic.
It is hoped that the implementation of the above macro and micro recommendation will go a long way to improve, if not eradicate the problem of labor non-utilisation (i.e. unemployment and underemployment) in Sindh province.